Word: shernoffs
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Egan fought back by hiring William Shernoff, a Claremont, Calif., lawyer whose specialty is suing insurance companies for dealing in "bad faith" with their customers. In 1974 Shernoff not only persuaded a jury to award Egan $123,600 in damages for lost benefits and emotional distress, but he also won a whopping $5 million in punitive damages. That was a blow to Mutual's image as well as to its pocketbook: under California law, punitive damages are awarded to punish and deter "oppression, fraud or malice...
When the California court was ruling on the Egan case, Lawyer Shernoff was off in Mississippi instructing another jury in what he calls "the therapeutic concept of punitive damages." His client this tune was Wilfred Fayard, 58, a sheet metal worker, who had suffered a back injury while carrying a bathtub. Fayard lost his disability benefits because his injury was considered by his insurance company to be "nonconfining." That was because Fayard, on doctor's orders, managed to walk a few hundred yards every day for exercise. At the trial, a former claims adjuster for Fayard's insurers...
...Shernoff says that the nonconfinement clause is only one lever that unscrupulous adjusters may use to squeeze customers out of their benefits. Another device is the common requirement that insured people fully disclose their medical histories. In one California case, a Shernoff client with a back injury had been denied coverage because she failed to report that she had rhinitis and amenorrhea. Rhinitis is the medical term for a runny nose; amenorrhea means that she had an erratic menstrual cycle. Shernoff settled that case...
...willingness of Americans to bring suit. Insurers are pressing for legislation to ease their burden by shortening statutes of limitation, putting a lid on lawyer contingency fees, and setting up Government reinsurance funds. But plaintiffs' lawyers insist that large awards often benefit society. Says Claremont, Calif, Lawyer William Shernoff: "I've seen case after case in which a company reformed shoddy business practices after being hit with punitive damages. It really works...